Volcker's Tough Approach As Fed Chief Upset Many

President-elect Obama named the 81-year-old Volcker yesterday to head a new economic advisory panel, citing "his sound and independent judgment." But nearly three decades ago -- when Obama was still a college student -- the towering 6-foot-7-inch Volcker was one of the most disliked public figures in the United States.

As Federal Reserve chairman, he took an uncompromising stance against inflation, jacking up interest rates as high as 20.5 percent. Unemployment soared to 11 percent in the most painful recession since the Great Depression. Volcker had been appointed by President Jimmy Carter in 1979, but his tough medicine likely contributed to the Democrat's failure to win reelection in 1980.

According to Joseph Treaster's 2004 biography, "Paul Volcker: The Making of a Financial Legend," angry workers who had lost their jobs flooded Volcker's office with mementos of their plight -- two-by-fours from carpenters unable to build houses; bags filled with ignition keys from car dealers stuck with unsold cars. One leading Democrat, Rep. Henry Gonzalez of Texas, called for Volcker's impeachment. Another, Rep. Frank Annunzio of Illinois, sputtered at the cigar-smoking Volcker during a hearing: "Your course of action is wrong. It must be wrong. There isn't anyone who says you are right."